Why Thomas Cook should be rescued

Posted in 'Personal Finance' by Barry Stamp

23 November 2011

Thomas Cook is negotiating a new £100m package of syndicated finance to help it weather the storm that has arisen from the downturn in demand for holidays caused principally by the 'Arab spring' turmoils, and also by our general reluctance to book holidays in a time of economic uncertainty.

The banks should say 'yes', even though this will bring Thomas Cook's borrowings in excess of £1bn, as if it does fail, the banks that provide it with credit card processing services - HSBC to name but one - will result in a Perfect Storm of claims under section 75 of the Consumer Credit Act 1974, as under that law the banks will be jointly liable for failed flights and holidays.

Looking at this same problem from the point of view of a consumer, any holiday or flight should always be paid for on a credit card to make sure that the extra protection that the credit law provides is always available, in addition to any other safety net provided by ATOL or by travel insurance.

Most UK consumers carry a wallet or purse full of cards with rates that were appropriate many years ago, and which do not take account of the improvement in financial fortunes that has taken place since the cards were issued. With many 0% deals available, there are immediate savings to be had by making use of your current credit standing and switching to cheaper UK lenders.

Click here to use our credit card finding service that matches your credit score to lender appetite, so you have the very best chance of getting a new, cheaper card.